Kickstarter Focuses Its Mission on Altruism Over Profit | Hacker News Reader

Kickstarter Focuses Its Mission on Altruism Over Profit

nytimes.com

92 pointsdpflan23 comments

It took almost one year into building my business to realize that I actually had the option to not take on venture capital. That is how ingrained the idea of taking on capital and later either going public or getting acquired is in most startup circles. Bootstrapping almost felt like a non-option until I later heard about the prospect from several other (less-vocal) sources.

I think it's great that Kickstarter, a fairly young business with a prominent presence in the press, is showing yet another option that companies have outside of the common IPO/acquisition routes.

I am endlessly surprised at how ingrained this idea is too. Hanging out in places like HN, it feels like that's the only way one can build a business when it really isn't. There's nothing wrong with starting slow and gradually transitioning to working on it full time as/if demand grows.

This is basically the difference between 'small business' and 'startup'. Startups are a subset of small businesses that take on external capital to grow quickly. HN feels like startups are the only thing around because... well... it is (or was) the marketing forum for a startup accelerator, and hence not really focused for the slow, measured small business ramp-up.

well, look at the HN sponsor and the advertisement for companies around here....

i may not always agree with spolsky, but there are a few pieces of his that i found very thought-provoking, and which have stuck in my mind. one of them is the "ben and jerry's versus amazon" post:

http://www.joelonsoftware.com/articles/fog0000000056.html

it may seem like it doesn't really say anything new or insightful, but i have found it very helpful to have the distinction made so clearly, and to have a concrete epitome of each type.

OT, I am too young to remember a time when switching ISPs meant switching email addresses. That is nuts!

OK, so given that Kickstarter isn't fully bootstrapped, if they say they never want to sell or exit, how do they not make all of their investors upset? Dividends, buy backs? I like their conviction but it would seem like false advertising to the investors.

The article talks about how the founders told their investors they weren't looking at a huge exit, and that they were planning on paying dividends soon.

Chris Sacca talked about it in-depth on This Week in Startups a while back. From day one they told investors they planned to never sell. Chris Sacca didn't believe them but was in for the mission (and kept Kickstarter off his promotional material for a while because he wasn't sure about the return possibilities). Over time he believed the founders more and more that they wouldn't sell and they're in it for the long haul.

Similar story with Fred Wilson and USV.

I heard their founder/current CEO Yancey speak at a startup accelerator and speak extensively about the business. According to him they told their investors they have no intention to have a liquidity event. He suggested the investors were in interested in Kickstarter as marketing for their firm. It seems like they didn't take very much money. Seemingly a large enough sum to help grow the business but not large enough to shy investors away from a business that doesn't aspire to provide meaningful returns.

Have you listened to the Startup podcast's coverage of Gimlet media? Seems like a similar situation, some unique businesses can secure prestige rounds providing they are not seeking huge amounts of capital.

this is literally in the story. Dividends coming within a year or two.

This is great news. I'm thrilled that Kickstarter was able to do this, that its investors let them, and that the NYT thought it was worth writing up.

I hope other companies follow suit, and that an ecosystem can develop of such companies. This page goes into how it is apprently very possible to get investment as a benefit corp: http://benefitcorp.net/investors/who-investing-benefit-corps

Here is principle from Kickstarter's benefit charter: "Kickstarter will not lobby or campaign for public policies unless they align with its mission and values, regardless of possible economic benefits to the company." (the charter https://www.kickstarter.com/charter?ref=pbc_letter also contains those values).

If anyone has questions about how to do this, or what this means for Kickstarter, feel free to fire away.

Welcome to the discussion! This comment [1.] has discussion about how Kickstarter is handling its commitments to its investors. I think some analysis of that would be helpful.

Questions:

1. Can you discuss this more: how Kickstarter, its founders, board, and investors reached agreement?

2. Can you discuss how you did this in relation to your long term vision of the company?

3. What does this mean for Kickstarter with regard to supporting campaigns and helping creatives?

___

References:

[1.] https://news.ycombinator.com/item?id=10250367

What made you decide to incorporate as a B corp instead of a non-profit?

Hey Yancey.

Do you know of a community for "social profit" oriented organizations, where we can share information, learn from each other, collaborate, recruit and inspire more people to make the switch?

(HN naturally tends to be profit or tech-for-tech's-sake oriented so topics such as this tend to get buried. Case in point, this article got little if any time on the HN front page. Readers here will debate endlessly about Android vs iPhone, but arguments that challenge tech's current culture such this other article from another New Yorker today tends to fall on deaf ears: https://news.ycombinator.com/item?id=10252616)

I'm working on a project (tentatively named GiveHub) to get more social good and nonprofit projects onto GitHub and to enable and encourage coders to contribute to them. While open source is itself a social good, it is usually indirect so. The level of open source focused directly on social good seems very far below its potential. I believe many coders would love to contribute their time and skills, but it's hard to find projects that match their interests and skills, and even when found, it's not easy to contribute.

I live in Brooklyn and would love a chance to chat with you over coffee, a drink or lunch sometime. I'd come your way and make it as convenient for you as possible. You can find my email address in my profile. I'll reply with my real, non-eevil identity. :)

My first learning about Kickstarter the company was via the Diaspora Kickstarter. Since then, I've become a bit cynical of Kickstarter for all the sketchy campaigns and cagey setting of expectations. Going B Corp wins them a lot of goodwill from me.

> Kickstarter’s mission to “help bring creative projects to life”

Still only available in 13 out of 50 European countries. That's after adding five countries a few months ago.

Can someone give a simple explanation on the difference between incorporating normally, incorporating as a non-profit, and incorporating as a "public benefit corporation"? I've tried to look it up but I'm getting conflicting information.

A PBC has stronger protection against being sued by shareholders for focusing on goals besides $ valuation .

Also, they are still a "for-profit" entity; they just legally declare they're going to do things with said profit besides make money for the shareholders.

Going full non-profit would have stricter requirements for income, marketing, business deals, etc. Mozilla did something similar where you download Firefox from Mozilla Inc. that has business arrangements with Google and Pocket (for example); The Mozilla Foundation itself can't enter into those sorts of agreements without violating their non-profit status.

It's all really complicated and a big headache and Kickstarter's doing a good job by avoiding all that, honestly.

B corps explicitly include the creation of public benefit in their goals, whereas traditional C corps exist only to earn profits for the shareholders. Incorporating as a B corp allows a company to pursue public-oriented goals that could diminish profitability without being liable to shareholder lawsuits. They are both taxed the same. This is not federal law--B corps only exist in some states, and only according to the enacting legislation of those states, so the exact laws governing them will vary.

That's great. I appreciate them making such choice.

See also their charter: https://www.kickstarter.com/charter?ref=pbc_letter

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